LinkList

Every day we come in to the office and grab our morning coffee, tea or hot chocolate to begin our workday. For many offices, and some households too, K-cups are used in a Keurig (subsidiary of Green Mountain) brewing machine. This NY Times article notes Green Mountain’s K-Cups come in 300 varieties of coffee, tea and hot chocolate, and a new line of blends made to be brewed over ice. With this many options to choose from, there’s no wonder 80% of Green Mountain’s sales came from these single-use pods and brewing system last year!

The predicament for Green Mountain is just this; these nonrecyclable, nonbiodegradable, plastic and tinfoil pods that are made to be disposable. They have begun to research possible greener packaging. Some of which include biodegradable packaging, programs to recycle the pods or making the coffee filters themselves reusable. Michael Dupee, Green Mountain’s vice president for corporate social responsibility, said many consumers had started brewing coffee in reusable metal-mesh filters for the Keurig machines, which accept ground coffee. Green Mountain also has a prototype paper K-cup filled with Celestial Seasonings tea that was to be tested this summer. Furthermore, they are already working with International Paper to develop the Ecotainer (a hot-beverage cup with a plant-based, compostable lining).

I do think about just how many K-cups our office goes through per day let alone the many other households and companies out there that also brew on a daily basis. Props to Green Mountain on their road to becoming a Greener Mountain! Check out the rest of this article to read about what else they are doing and what some of the other coffee companies are doing to combat the waste issue.

Commodity prices for cotton have hit a 15-year high, nearly doubling their price since this time last year.

The culprit is a worldwide cotton shortage that has made farmer's cotton, which is used in everything from clothing to hygiene products, an expensive and sought-after commodity. Commodity markets show that the fiber is selling for $1.09 - compared to just $0.65 last year.

"The price of cotton is the highest it's been since 1995 when there was a worldwide shortage of cotton, too," Billy Eggemeyer, a cotton farmer from Upton County, Texas, told NewsWest 9.

However, high cotton prices don't necessarily equal big profits for farmers. Thanks to the cost of irrigation, fertilizer, pesticides, farm maintenance and labor, it typically takes between 60 and 65 cents to produce one pound of cotton, according to the source.

"We have much more fertilizer costs for our electricity. We have $100 to $125 an acre in electricity charges, just trying to irrigate our crop," Eggemeyer added.

The cotton market is also very volatile. Although cotton prices are high today, they could sink tomorrow, said cotton professional Mark Hodges.

"Nobody really knows what the market is going to be in 10 minutes," Hodges told the Tidewater News. "It can go down as fast as it goes up."

The debate between Hertz and Avis over a Dollar Thrifty merger rages on, even as Dollar Thrifty shareholders are scheduled to vote on the measure.

Earlier this year, Hertz won a bidding war against Avis to secure a merger deal with Dollar Thrifty. Now, it's up to the Tulsa, Oklahoma-based Dollar Thrifty's shareholders to decide if the $1.46 billion offer is good enough.

Refusing to give up its interest in the discount rental car company, Avis has offered Dollar Thrifty $20 million if its planned merger with Hertz doesn't go through. After months of declining to add such a proposition, Avis changed its mind after Hertz announced that it would immediately terminate the deal with Dollar Thrifty if its shareholders voted against the merger.

Hertz, which is based in Park Ridge, New Jersey, has said the most recent bid is its "best and final" offer.

"We arrived at our best and final $50 [per share] offer through an open, thoughtful and competitive negotiation and we cannot be held hostage in an open-ended process," said Hertz's chairman and CEO, Mark P. Frissora. "We are confident of a stand-alone strategy, accelerating the growth of Advantage and building on 4 straight quarters of U.S. airport revenue growth which significantly outpaces our publicly traded competitors."

Competition continues between Hertz and Avis over Dollar Thrifty merger

There are many choices of manufacturers and machines to choose from when determining what type of office equipment you should purchase. You can look to the direct market or a reseller, but what are the critical pieces to consider and who is going to be the best fit for your business needs?

Suppliers continue to invest in their offerings looking to expand into different marketplaces and customer base. A perfect example of this is Xerox's innovation solution for the book printing industry...coming soon. An article in Melodika.net explores 'The Espresso Book Machine". This machine "prints, binds and trims bookstore-quality paperbacks with color in minutes...and will give retailers new ways to drive revenue". Suppliers also join forces, Ricoh and IKON, in order to offer document management solutions allowing businesses to improve workflow, increase productivity and efficiency while reducing costs.

However, there is still the question of what is right for your business. Here are a few questions to ask yourself before going to market:

What is going to be the function of the device; copy, scan, print, fax, all of the above?

What features are offered and what are my needs; networking, document management, marketing...

What is my budget? Should I lease or buy?

Once you have a plan of action you can start looking at options. Suppliers are more than happy to walk you through their product line and provide you with handouts/brochures. They will tell you about all of the bells and whistles offered, at a SMALL extra cost and why they are the right choice for you. Make sure you ask about all the costs involved like maintenance and up front investments for delivery, installs, removals. Make sure you research the market to see what is new and what is coming up. A side-by-side analysis of suppliers/equipment can be very helpful as well.

So many things to think about. This may be a task for a procurement service provider who has experience in world of Office Equipment. RFP's may be necessary in order to narrow down the supplier list and focus in on who is going to provide you with a high quality product that gives you what you need, and maybe a little extra, but at a market competitive price.

Everyone that I know who has seen it agrees - hilarious. The video does a great job making fun of the economic woes Cleveland, and the rest of our country, are facing. However new reports recently published have shown the seriousness of the situation.

On Tuesday the U.S. Census Bureau released new statistics, stating that thirty one of our fifty great states have seen a rise in poverty from 2008 to 2009. Furthermore, not one state reported a significant decline in their poverty rate or in the number of impoverished citizens.

While poverty rates can be linked to a number of things from low educational rates to average family size, economists agree that for cities like Cleveland (ranked as the second poorest city in the country behind, you guessed it, Detroit) many of their economic concerns are due to the aftershock of the recession and, more specifically, their unemployment crisis. The 2009 American Community Survey, the new census report, is the first to show the impact of the Great Recession statically – with disturbing results. As the recession brought cutbacks in worker’s hours, wages and often, elimination of entire careers, it also introduced a new type of poor. The new poor are reliant upon the diminishing job market. They are people who have been making due for many years and in some occasions, flourishing who now find themselves and their families without an income. However like most of us, they still have a mortgage/rent and bills. They have no means to financially recover when their occupational resources have left them stranded. These newly poor families are often forced to rely on their neighbors, communities and government assistance to get by.

According to the Census Bureau, more than half (51.3%) of children in Cleveland are growing up in poverty because of their parents’ inability to find work. Unfortunately, this forecasts that the worst is not over for Cleveland. Without a healthy, educated and trained pool of worker’s to draw from, companies will outsource. A line from one of the parody videos comes to mind. It jokes that their trains are carrying jobs out of Cleveland and sadly, the line has honest undertones. The only way for Cleveland and other cities in similar predicaments to pull themselves out of these dire straits is to create a substantial amount of new jobs. Of course this is easier said than done. The Great Recession has put in motion a jobless cycle that will take generations working together to turn around. It will take a great deal of federal funding just to get the ball rolling in the right direction.

But, I do have some good news for Cleveland - at least you’re not Detroit.

Fast food chains are facing a tough challenge these days as the cost of the ingredients in some of their best-selling menu items continues to rise.

Steve Hare, CEO of Wendy's/Arby's group, called the increase in the price of bacon, beef, cheese and other key hamburger ingredients "troublesome" - and the rise shows no signs of slowing down. According to the Atlanta Journal-Constitution, bad weather and strong demand have driven up the cost of corn, which is used to feed most commercial livestock, including cattle, pigs and chickens. Eventually, those price increases will be reflected in the cost of meat, although long-standing contracts specifying low chicken prices have helped many restaurants stay afloat.

Steve West, an analyst with Stifel Nicolaus in St. Louis, said that many restaurants - everything from McDonald's to Applebee's - will need to increase the prices of their fare in order to offset the rising commodity costs. But that could be a problem when the restaurants' images rely on special deals and deep discounting, such as offering two entrees and an appetizer for $20.

McDonald's seems to be doing the best job of managing rising costs so far, but Sanford C. Bernstein analyst Sara Senator warns that no company will be able to keep prices low forever.

"They may not feel it right away, but they will eventually feel it," she told the paper. "Contracting and hedging tends to smooth pricing, but unless you're very, very good - which few people are - you can't always have low prices."

It's not just restaurants that are feeling the squeeze. Starbucks recently announced that due to an increase in coffee bean prices, the cost of some of its more "labor intensive" drinks could soon be going up.

A new supply chain system is helping the railway transport company CN manage the flow of coal from mines to its West Coast terminals.

The new approach improves supply chain transparency and uses weekly reports to help CN's managers keep track of how much coal is on hand at export terminals and mines, the arrival date of vessels, trains and other shipments, the amount of coal being shipped and the number of trains en route to and from the mines at any given time. The revised system has improved service to coal customers and has helped the company avoid bottlenecks and other supply issues.

"This end-to-end view of our coal supply chain, along with a focus on closer customer collaboration, improves coal logistics, which in turn allows coal producers to maximize sale opportunities," said Andy Gonta, CN's vice president of bulk commodities. "This approach also positions the railway and its customers to anticipate and solve any bottleneck issues well before they reach the boiling point."

"This is a win-win innovation for all the players involved in the coal supply chain," he added. "Transparent measurement and balanced accountability are key to our overall ability to tap growing markets."

If the UK wants to reduce the cost of offshore wind energy, it will need a better supply chain, recent research indicates.

A new report by the UK Energy Research Centre has found that a lack of manufacturing competition, planning and supply chain constraints and rising material prices had increased the capital costs of offshore farms to more than £3 million per megawatt, more than double what it was in 2005. Contributing to the higher costs is the fact that approximately 80 percent of the value of offshore wind farms comes from overseas, which leaves it particularly susceptible to the fluctuating price of the pound.

Although wind turbine manufacturers have been hindered by the relatively small demand for wind energy in Britain, Dr. Robert Gross of Imperial College London said that costs could fall by as much as 20 percent over the next 15 year if the UK decides to become more invested in the technology. However, he added that Britons should be guarded in their optimism.

"There's more of a general culture of collaboration with industry and working with the engineering sector that's been absent in the UK for the past two decades," Gross told The Engineer. "Their absolute levels of financing for R&D [research and development] are higher as well. These have grown in the UK under Labour but are still small under the scale of the challenge."

The UK's 3,067 wind turbines are currently producing about 5058.845 megawatts of energy and powering about 2,828,648 homes.

Travelers at Baltimore's BWI airport could see a sharp rise in the cost of airfare if Southwest goes through with a proposal to buy rival AirTran.

Thanks to competition between the two airlines, BWI offers discount flights to dozens of locations - a trip to Florida and back will cost customers just over $200, and maybe less if there's a sale, the Baltimore Sun reports. Thanks to the airlines' low fares, BWI has been one of the few airports able to add passengers during the economic downturn. But that could all change if Southwest buys AirTran, removes its competition and begins charging whatever it wants for flights to Boston, Chicago, Atlanta, Los Angeles and other popular locations.

"Travelers in Baltimore could potentially really feel the loss of competition there," Diana Moss, a vice president at the American Antitrust Institute in Washington who closely follows airlines, told the paper. "That's a huge increase in market share resulting from the merger."

Currently, Southwest is BWI's No. 1 carrier, and AirTran is a close second.

A merger between the two airlines could be worth as much as $1.4 billion. It would also make the resulting airline the dominant career in the Washington, D.C., region, with 31.5 percent of the market and room to expand.

Merger between AirTran and Southwest could mean end of discount airfare

Visitors to an annual international freight and supply chain exhibition in Dubai will be seeing a little something extra this year - a segment about "eco logistics."

Dubai SITL 2011, one of the Middle East's premier supply chain conferences, will be adding an "eco logistics" meeting to its schedule. The new segment will focus on green supply chains, environmentally friendly shipping and logistics practices and other ecological concerns. The exhibition's organizers, Reed International Middle East, have arranged for the new environmental element to promote and highlight supply chain concerns such as energy reduction, improved fuel consumption and corporate responsibility.

In addition the new ecological segment, the 2011 event will also include seminars on transport and logistics, logistics real estate, information systems and technologies and logistics infrastructure.

Green supply chain are becoming a focus for many major corporations as consumers insist on purchasing products that don't contribute to global climate and poverty issues. Even some corporate landmarks - such as Wal-Mart and H&M - have recently committed to greening their supply chain, shipping and logistics practices.

Even as the prices of several major commodities continue to rise, U.S. merchants are reluctant to pass the price hikes onto their customers.

Prices are soaring on everything from oil to wheat to coffee, but many store owners and corporate executives are trying hard to absorb the increases themselves without raising the prices of their wares, BusinessWeek reports.

"We don't think it's prudent of us to plan on [price hikes] in this environment," ConAgra Foods CEO Gary Rodkin told the magazine, even as his company reported that inflation exceeded cost savings last quarter.

Most major air carriers are also struggling to absorb rising fuel costs without charging travelers more. According to BusinessWeek, domestic airfares are actually falling - despite sharp increases in the price of oil and other jet fuel components.

According to the U.S. Producer Price Index, the cost of the most popular commodities used by U.S. companies rose 2.7 percent from June to July and another 2.3 percent from July to August.

Still, for many companies, an eventual price hike may be inevitable. For example, the popular coffeehouse chain Starbucks has recently announced that it will be raising the price of several of its more "labor intensive" drinks to help offset the rising price of coffee beans.

The high price of a cup of coffee at Starbucks has been a punchline for years - but now, your favorite drink from the Seattle-based company could cost even more.

The company has announced that it is planning "targeted" price increases for certain beverages, based on the soaring price of green coffee beans. Drinks that are "labor-intensive" as well as the larger sizes are the most likely to see price increases, while Starbucks hopes to maintain its regular prices on its most popular drinks.

"Over the last six months a highly speculative green coffee market and dramatically increased commodity costs have completely altered the economic and financial picture of many players in the coffee industry," said Starbucks chairman and CEO Howard Schultz. "And while many, if not most, coffee roasters and retailers began raising prices months ago, we have thus far chosen to absorb the price increases ourselves and not pass them on to our customers. But the extreme nature of the cost increases has made it untenable for us to continue to do so and we have been forced to take the steps we announced today."

Coffee is one of the most traded commodities in the world, second only to crude oil. The price of green Arabic coffee beans - more popular than the stronger Robusta variety - reached a 13-year high earlier this month.

Two major corporations have made a commitment to ensuring that their textile supply chains are environmentally friendly.

Wal-Mart and H&M have both agreed to improve the "greenness" of their textile supply chains. Often, textile production is outsourced to China, where lax regulations mean that tons of toxic dye gets dumped into rivers and waterways every year. Dyeing and finishing fabrics can pollute as many as 200 tons of water per ton of fabric, according to Reuters. What's more, the process consumes an enormous amount of energy to produce steam and hot water.

The industry is centered in China, India, Bangladesh and Vietnam, where governments are still developing environmental regulations. This allows many suppliers in an industry that has a massive environmental footprint to find loopholes and lapses in the law.

There are, however, less harmful - and less expensive - ways to produce high-quality clothing, interior goods and other textile products.

At the Clinton Global Initiative conference earlier this week, Wal-Mart agreed to work with its suppliers to embrace better, safer and more environmentally friendly production techniques. This announcement came just a few days after H&M, a popular and low-cost fashion retailer, agreed to help its suppliers become more environmentally aware.

Organizations throughout California are urging Governor Arnold Schwarzenegger to consider a bill that would make supply chains in the state more transparent and help prevent human trafficking and slavery.

The bill, known as the "California Transparency in Supply Chains Act of 2010," would require companies to publicly disclose what policies they have in place to ensure that their supply chains are free of slavery, trafficking and other human rights offenses. Companies would be expected to conduct unannounced audits of their suppliers, utilize third-party verification to check up on component providers and hold their employees and executives accountable for any and all human rights violations discovered.

"In order for companies to demonstrate respect for human rights, they need to implement 'human rights due diligence processes' that include a policy stating the company's commitment to respect human rights; assessing actual and potential human rights impacts; integrating these commitments into internal oversight systems and monitoring and reporting on performance," said Rev. David M. Schilling, program director of human rights at the Interfaith Center on Corporate Responsibility.

Human trafficking and slavery are two of the most heinous offenses that persist in the modern world, despite efforts by governments, corporations and nonprofit groups to end them. According to statistics from the Polaris Project, estimates of the number of modern-day slaves vary wildly from about 4 million to as many as 27 million worldwide. More precise numbers are not available because most slavery rings are secretive, illegal and difficult to uncover. In addition, between 600,000 and 900,000 people are trafficked illegally across international borders every year. According to the U.S. Department of State, as many as 50 percent of these victims are children - and as many as 80 percent are female.

Some global corporations have knowingly or unknowingly taken part in a system that promotes these activities by demanding the lowest-cost facilities and laborers, regardless of wage, living conditions and employee rights.

"This bill reflects the realities of the marketplace, which increasingly requires that companies be sensitive to social and ethical issues, including labor and supply chains, and create human rights policies as well as processes to evaluate, monitor and strengthen those policies," said Julie Tanner, assistant director of socially responsible investing at CBIS.

The bill would affect 3,200 global companies with annual revenues of more than $100 million each. Not all of these companies are on board with the proposed legislature, however. Some have argued that the bill asks companies to delve further into their supply chains than is possible or reasonable, while others are concerned that uncovering this kind of information will be too difficult and put their companies at risk. Even so, a number of progressive corporations - such as Nike, Gap, Target, Wal-Mart, Disney, Levi's and Tiffany & Co. - already have measures in place that investigate and disclosure this kind of information.

If the realities of human slavery and illegal trafficking aren't enough to motivate a company to begin investigating its supply chain, Tanner reminds corporations that the discovery of illegal acts and human rights violations can have other negative consequences, too - such as business interruptions, negative publicity, boycotting, public protests and a loss of consumer trust, all of which will tank shareholder value and potentially cause a company to fail.

"As shareholders and investment analysts who have worked for many years with corporations to adopt codes of conduct that establish rules for respecting basic human rights in the workplace, the availability of information like that requested in [the bill] is critical to our business and is valuable to our evaluation of a company's risks and opportunities," Tanner said.

A merger between CenturyLink and Qwest is getting closer to completion as nine state Public Utility Commissions have indicated their approval of the deal.

The two telecom companies had already received antitrust clearance from the Department of Justice and the Federal Trade Commission, and now nine states - in addition to the District of Columbia, which believes no action is necessary - have issued approval for the merger to move forward.

In addition to the capital, CenturyLink's home state of Louisiana has approved the arrangement, along with the Mississippi Public Service Commission, which gave its approval for the deal last week. This was followed by California Public Utilities Corporation, the Georgia Public Service Commission, the Hawaii Public Utilities Commission, the Maryland Public Service Commission, the Ohio Public Utilities Commission, the West Virginia Public Service Commission and the New York Public Service Commission, which each cleared the companies' merger applications without conditions.

To complete the deal, the two companies must secure the approval of 12 more states and the Federal Communications Commission. Executives at both CenturyLink and Qwest expect to see this goal achieved in the first half of 2011.

Coca-Cola plans to emphasize women in its supply chain by doubling the number of women entrepreneurs with whom it works in the next 10 years.

Coca-Cola CEO Muhtar Kent said the company's goal is to "empower" five million women by 2020 through its global supply and distribution system, the Atlanta Journal-Constitution reports. In particular, Coca-Cola wants to grow its network of African "micro distribution centers" - an independent network of individuals who sell the company's products to retailers, often using pushcarts and bicycles - by encouraging women to take part in the entrepreneurial system.

"We need to increase awareness that better societies can be created as a result of empowering women," said Kent.

Coca-Cola's business model relies on thousands of small-scale distributors and retailers, many of whom are female. So far, the company says it is on track to meet the ambitious goal it announced at last year's Clinton Global Initiative to ensure that half of all new micro-distribution centers would be run by women, the paper reports.

At this year's Clinton Global Initiative, more than 300 companies have already pledged more than $2.5 billion to helping charitable causes in developing and industrialized nations around the world.

Once again, an app to beat all apps has been created for iPhone and iPad users. How many home run hits have you missed while waiting in line to get a cheesesteak or beer at the Phillies game? Now you don’t have to even get up!

According to the Philadelphia Inquirer, Aramark is working in conjunction with the Major League Baseball's At Bat 2010 or At Bat 2010 Lite "app," which the league, the Phillies, and the vendor have altered for use in Citizens Bank Park to allow for kitchen to seat delivery of a variety of hot food and cold beverage options. How does it work?

The customer has to enter their seat coordinates and credit card information, the app processes the order and sends it to the Aramark system. The food is delivered hot and moist within 30 minutes or less (beat that Dominoes!). So far it has been a wide and positive success, fans are concerned though that when this expands if the quality will continue as initially experienced.

Aramark confirms that they will not offer the same concessions as the seat vendors, such as hot dogs, cotton candy and popcorn in order to avoid deteriorating that atmosphere in the ballpark. They simply want to offer convenience to those who are willing to pay a higher premium for the chance to see every exciting aspect of the game.

Now if only they could come up with a solution for the long lines at the bathroom, I’d like to see an iPhone app for that!

U.S. Aerospace has entered into a strategic cooperation agreement with the Beijing, China-based company AVIC International Holding.

Under the agreement, the U.S. aerospace and defense contractor, which is based in Los Angeles, will provide AVIC with potential projects on which the parties can bid together, or specifications for aircraft parts and components to be manufactured by AVIC for the company or any of its partners. The two companies are expected to bid on at least $100 million in potential orders in the first year.

In addition, the agreement outlines guidelines for collaboration in the manufacture, importing and exporting of aircraft components and equipment. AVIC will supply all personnel, materials, facilities and other resources that U.S. Aerospace requires.

"Building long-term relationships with leading international aircraft manufacturers like AVIC greatly enhances our production and pricing capabilities," said Michael C. Cabral, president of U.S. Aerospace. "Partnering with AVIC advances our ability to bid for, secure and perform work we have previously turned away or did not pursue. Increased globalization and international cooperation will benefit both companies and all of their stakeholders."

Despite its lack of sales tax, manufacturing prices in New Hampshire are among the highest of any state in the U.S.

According to a recent study from the University of Connecticut, entitled "High Wages, Low Costs: A Connecticut Paradox?," New England is the priciest region of the country to in which to manufacture. In fact, the three most expensive states for manufacturers are Vermont, New Hampshire and Rhode Island.

The study found that it costs 93.5 cents to manufacture a dollar's worth of goods in the Granite State. The single most expensive state in which to manufacture is Vermont, at 95.9 cents, and Rhode Island came in third at 93 cents. Comparatively, on a national scale, the average cost to produce one dollar of goods is 83.3 cents.

Oregon ranks as the least expensive state for manufacturing, at 70.6 cents.

Even so, the businesses climate in these pricey states isn't too terrible. New Hampshire saw a 1.43 percent increase in employment between 2009 and 2010 - the second-highest in the nation, after Kentucky.

Rhode Island, New Hampshire, Vermont most expensive manufacturing states

From an ecological standpoint, cement is a terrible material to work with. It's expensive and the plants that manufacture it are some of the worst carbon dioxide producers in the world, in addition to releasing massive amounts of the toxic chemical mercury. But now, one company is working to make cement "greener."

Sriya Green Materials, an Atlanta-based company, is planning to construct a $200-million facility that would be capable of producing "green" cement that's less expensive and better for the environment.

Using current manufacturing techniques, "each ton of cement emits about 1,763 pounds of CO2 during manufacture," Sriya CEO Srinivas Kilambi told the Atlanta Business Chronicle. That figure, which considers both the carbon released from the limestone dug up to create the cement and the emissions resulting from the heating process of manufacturing it, represents close to a 1:1 ratio.

Sriya's process helps eliminate some of these carbon emissions by working at much lower temperatures and producing cement in smaller batches. Thus far, the company's cement process has been proven laboratory testing, although there are still some concerns about large-scale production. Sriya plans to build a "pilot plant" next year to test the technology on a commercial scale.

Cement, which is a mixture of limestone and clay ground into power and mixed with water, is one of the most commonly used materials in industrial construction.

Goodyear has warned consumers that they could be paying a lot more for tires in the near future.

Tires are costing more because demand for vehicles is out-pacing the ability of the world's rubber suppliers to produce enough raw materials. Goodyear CFO Darren Wells had gone on record stating that raw material costs could rise by as much as 35 percent over last year's prices in the third quarter. As a result, Goodyear - and rival tiremakers Cooper and Bridgestone - are expected to raise their prices by up to 6.5 percent in October.

"Drought earlier this year and heavy rains later on hampered tree-tapping across Asian plantations," said Pongsak Kerdvongbundit, managing director of Phuket, Thailand-based Von Bundit Company, the largest natural-rubber producer and exporter in Thailand. "Global production will lag behind soaring demand for at least another two years."

Sales of rubber are increasing at their fastest rate most in six years, helped by what the International Monetary Fund has stated could be the fastest global economic growth since 2007, according to Bloomberg.

The petrochemical industry will be holding a conference to discuss supply chain issues affecting the transport, sale and harvesting of crude oil and other petrochemical components.

The second GPCA Supply Chain Conference will be held from October 24 to the 26 in Bahrain and has the approval of Bahrain's Oil and Gas Minister and chairman of the National Oil and Gas Authority, Abdulhussain Mizra, who will be opening the conference with a keynote speech.

"The first GPCA Supply Chain Conference was extremely successful and with such high level speakers this year, we anticipate even more interest from global and regional petrochemical executives," said Dr. Abdulwahab Al-Sadoun, secretary general of the GPCA. "Speakers will also provide updates on projects and plans in process to get the Middle East supply chain infrastructure up and ready to meet the world's appetite for chemicals."

Conference participants will discuss the most efficient practices to deliver petrochemicals safely and quickly to a world with a growing need for oil and gas.

Approximately 12 percent of the United States' oil is imported from the Middle East. Americans use 27 percent of the world's petrochemicals, though they represent only 5 percent of the world's population.

Cisco has announced the completion of its acquisition of the privately held Arch Rock Corporation, a company that creates Internet Protocol-based wireless network technology.

Cisco, a provider of networking solutions, hopes that acquiring the smaller company will accelerate its ability to facilitate the utility industry's transition to an open and interoperable smart grid.

Smart grids, which can adjust themselves to work around power outages and downed power equipment and allow companies and individuals to monitor and change their energy usage, are growing in popularity around the world. Cisco, whose equipment often requires significant energy usage, wants to offset the impact of its video conferencing and other networking technology by working to create smart grid solutions that will make its products both energy-efficient and extremely useful to businesses across the globe.

With the close of the acquisition, the Arch Rock team has become a part of Cisco's smart grid business unit and brings with it expertise in the field of smart grid research and development.

Students at the University of Texas at Austin's McCombs School of Business got up close and personal with supply chain management, thanks to an innovative new classroom strategy that puts students in the field in addition to teaching them theory out of books.

Students in Professor Michael G. Hasler's Introduction to Operations Management class had the opportunity to see the supply chain in action. With help from supply chain executives at Target Stores, graduate students in Hasler's course followed three items - a calculator, a patio furniture set and a doll - from Target's store shelves all the way back to their beginnings in Asia. After studying retail, transportation and distribution operations in the United States, the class traveled to the Chinese University of Hong Kong, where they spent nearly a month analyzing design, manufacturing, vendor-managed inventory, logistics and order fulfillment.

The class was such a success that the university has decided to make it a permanent offering. According to Hasler, seeing the supply chain in action got the business students excited about their ability to make an impact on business.

The students "are on fire about supply chain management," Hasler told the crowd at the recent SCOPE West supply chain conference in Las Vegas. "They know that a decision about stocking shelves in Austin will have implications back to the quantity of plastic pellets a manufacturer buys back in Guangzhou."

The McCombs School of Business is home to a vast supply chain study center, called the Supply Chain Management Center of Excellence. Students in another of Hasler's classes, also taught at the center, recently competed to create solutions for a case study based on Target's goal of "no stockouts" for their customers.

Last week there was a great story in my state, Pennsylvania, about a PA government contract with a consulting firm hired to provide reports detailing potential threats to critical infrastructure due to terrorist activities.

The reports, written by the Institute of Terrorism Research, ended up giving detailed accounts of public meetings and legal protests held by Tea-Partiers, Quakers, and animal rights activists. It also gave accounts of events happening outside of Pennsylvania, in places as far away as Ireland and Israel, but did note Pennsylvania schools with study abroad programs in these countries. These reports came with a price tag of $103K per year to the taxpayers of Pennsylvania.

I am glad to see that to the Institute of Terrorism Research (scary website here: http://www.terrorresponse.org) included both left and right wing groups in their reports. However bipartisan they were, the sad fact is they probably did more harm than good, in that these reports were largely ignored by law enforcement officials. Keeping their reports to actual threats (quality over quantity) would have been more effective, and kept them under the scrutiny radar.

Regardless, as with most government scandals, this only came to light when an outside group noticed something was wrong. Once Governor Rendell was informed he acted quickly and informed the group that their contract would not be renewed. He did not fire anyone on his staff.

It’s troubling to see our government display this level of ineptitude again and again, particularly at a time when most state and local governments are considering raising taxes or cutting social services or police/fire protection. Here is an idea, if you are spending too much, why not try performing a spend analysis? You know, looking at what suppliers you spend money with, and then looking to reduce those costs? In this case, the spend analysis could have pre-emptively found these wasteful and potentially civil-rights-violating costs and added $103K to the bottom line - in politics that’s a win-win. I wonder how much Pennsylvania, or other failing states like California or Illinois, could save if they tried to look at their spend in a strategic way just once. After all, looking under the covers only works if your eyes are open.

Diamond and jewelry retailer Zale has named John Legg as the company's new supply chain manager.

Legg will take over as senior vice president of the supply chain after leaving his former post at Managing Services International, where he was managing director. At Managing Services International, a global consulting company that he formed, Legg assessed, designed and launched supply chain solutions that helped companies with restructuring, process improvement and inventory management. Before forming the supply chain management company, he served as senior vice president of global distribution and logistics for Warnaco, a textile manufacturer, and vice president of international distribution and logistics for Liz Claiborne, a fashion designer. Legg is also a graduate of Northeastern University.

"The addition of John to our senior leadership team is an important step for us," said Matt Appel, CEO of Zale. "John's 25 years of retail supply chain experience will be instrumental in improving the supply channel that extends from receipt of product to distribution to retail locations."

Zale is working hard to improve its efficiency after it landed in hot water with Citibank for its lagging credit card sales.

When Apple launched the first incarnation if its revolutionary iPad, the lack of some key features, such as a camera, already had tech-savvy consumers speculating that the company would soon release an updated version. Now, it looks as though Apple's supply chain may be gearing up for just such a product, Digitimes reports.

Component suppliers for Apple's iPad, including touch panel and reinforced glass manufacturers, are completing validation with the computer and gadget maker for the highly-anticipated second-generation iPad, according to Taiwan-based component suppliers. The new iPad will likely sport the same high-resolution, 9.7-inch touchscreen display and many rumors project that it will include a front-facing camera and Apple's popular FaceTime application.

The second-generation device is expected to launch in the first quarter of 2011. As a result, Apple's component suppliers are expected to begin shipping parts at the start of the new year, according to the source.

According to Apple, the company sold more than 300,000 iPads on the first day the product was released. That figure is now close to 4 million.

It hasn't been easy for United Airlines and Continental Airlines to work out a merger that pleases everyone.

It's taken two and a half years just to come this far, and the merger has already faced some serious opposition. Earlier this year, the carriers had to appease the Department of Justice when competitors filed complaints that the merger would be unfair or might violate antitrust laws.

"Mergers typically fail in one of two places," Thomas Lys, who teaches about mergers and acquisitions at Northwestern University's Kellogg Graduate School of Management, told USA Today. "The first place is that it's a stupid deal. It just makes no sense, because there are no efficiencies to be gained from it. The second is that while it makes sense, you can't pull it off."

The deal between United and Continental makes both fiscal and operational sense, Lys says. By 2013, the new carrier expects to generate up to $900 million more every year in revenue than the two generate today and realize up to $300 million in cost savings. "But," Lys continued, "the integration phase of this is not going to be that simple. Airlines are not simple companies. They have complex financial structures. And there are huge labor and operations components that will have to be harmonized in order for those efficiencies to be obtained."

The next crucial step in the proposed $3 billion merger will come this Friday, when the two airlines' shareholders will gather to vote on the deal. While the deal makes sense fiscally - it would create the world's largest and most capable airline, with routes spanning the entire globe - some frequent fliers are having a more visceral emotional reaction that's giving them a little bit of pause.

"While flying, I constantly hear Continental's most-frequent fliers commenting that as the Continental corporate culture moves closer to that of United, they will seek other airlines," Mark Silberfarb, who has logged more than 1 million miles on Continental, told the Chicago Tribune. "The real problem is that a really good apple is merging with a bad apple, which will result in spoiled fruit."

Silberfarb isn't the only Continental fan who's concerned about the effect the merger will have on the brand's top-notch customer service. Many others are concerned that the carrier's Presidents Club lounge open-bar policy might vanish along with the Continental name. And United flyers have their worries, too - such as the loss of Channel 9, which lets nervous passengers listen in on cockpit conversations with air traffic control, and Economy Plus seating, which offers extra legroom.

There are other small details, too. For example, the two airlines will need to decide how to merge their boarding policies. Traditionally, Continental has boarded passengers from the rear of the plane forward, while United boards those with window seats ahead of those seated in the aisle or middle.

To appease these concerns, the airline has assured flyers that travelers checking in for flights will be able to use either airline's kiosks and that both United and Continental's frequent-flier plans will be combined to offer upgrades, free flights and other services. The airlines admit that travelers will need to exercise patience for a few days while the merger is completed and say all the details will be worked out after "Customer Day One" - the nickname given to the official roll-out of the new carrier.

The yet-to-be-disclosed date, speculated to occur early next year, will mark the debut of the airline's new signage - the Continental globe logo will replace the United "U" on United's planes, while United's brand will continue to appear on the jets.

It's been a long road, but the deal is scheduled to be completed on October 1.

Honeywell has announced the completion of its acquisition of Sperian Protection for approximately $1.4 billion, including the assumption of debt.

Honeywell is a Fortune 100 company that develops and manufactures technologies in safety, security, and energy. Sperian Protection, which provides personal protection equipment, will be merged with Honeywell's Automation and Control Solutions' Life Safety business to strengthen Honeywell's personal safety offerings.

Sperian, which is headquartered in Paris, has been manufacturing safety equipment including eye, ear and face protection, gloves and safety footwear for more than 50 years.

"Sperian Protection is an excellent fit for Honeywell," said Mark S. Levy, President and CEO of Honeywell Life Safety. "With highly developed product lines, well-recognized brands and a strong global distribution channel, Sperian complements and significantly strengthens Honeywell's position in the personal protective equipment segment. The addition of Sperian will enable Honeywell to further capitalize on the significant opportunities presented by this high-growth industry."

According to ABC News, Honeywell has also been eyeing business opportunities in China, where the company expects a 15 to 20 percent growth year-over-year for the next five years.

Microsoft is moving its IT platform into the public and private cloud to help make its supply chain more versatile, Computerworld UK reports.

"Part of the agility and adaptability [of a supply chain] is overcoming the paradigm of how you connect with partners," said Brian Tobey, corporate vice-president of manufacturing, supply chain, information and services at Microsoft. "The cloud helps us manage the scale and requirements of services. [Our cloud service] allows you to use server capacity as you need it."

According to Tobey, moving the company into the cloud will help eliminate the need for traditional one-to-one telephone connections with suppliers, which are highly inefficient.

"Our supply chain has grown tremendously over the last several years,” added Tobey. "As early as three years ago, we managed about 25GB a day of data coming into the organization. Now we manage 350GB a day, all coming in from different companies. That is one of the challenges of our supply chain, which affects are agility and adaptability."

Microsoft is just one of a growing number of companies choosing to do business in the cloud. Other notable enterprises that have made forays into the world of cloud computing include ESPN, the New York Times and Nasdaq.

Hyundai Steel has announced that it will be raising export prices for H beams and other steel products.

Hyundai, South Korea's second-largest steelmaker, said that the price hike would reflect the rising cost of the raw materials that go into making the products. Export prices for rebars will be raised by $30 to $40 per ton, to between $630 and $640, while the price of H beams, which are frequently used in construction, will be increased to $710 or $720 per ton from $680 or $690, according to a company statement.

The company didn't specify when the price hike would take effect, but increases in the cost of steel have been a common occurrence this year. Last month, Hyundai rose the price of its H beams by $40 per ton and the price of its rebars by $50 per ton to reflect price shifts in the industry.

"We decided to lift the exporting prices of rebars and section steel because of the soaring production cost resulted from the persisting increase in the scrap iron price and the improving international steel market," a Hyundai Steel official told the Korea Times.

Ernst & Young is reporting that it has cut its carbon emissions in the Americas by 15 percent thanks to a greener supply chain.

Compared to the 2008-2009 fiscal year, the professional services firm has reduced its carbon footprint by 33,200 metric tonnes of carbon dioxide. The company also reported a 12 percent reduction in intensity, or carbon footprint per person, for the 41,487 employees currently working for the firm in the Americas. The total carbon footprint for Ernst & Young America during the fiscal year 2009 was 187,610 metric tonnes of carbon dixoide - 38 percent of which was office-related, while the other 62 percent came from business travel.

"A greener supply chain: Since 2009, 100 percent of comprehensive [requests for proposals] over $250,000 have included questions to Ernst & Young's US suppliers about their environmental impact and green initiatives," the company said in a statement.

The company added that its network of individuals is to thank for the efforts that have helped the company go green.

"The network unites executives in our real estate, facilities management, IT and procurement groups with our employee volunteers who have been the champions for our green practices in their home offices for nearly a decade," said Leisha John, Ernst & Young America's director of environmental sustainability.

Ernst & Young isn't the only company focusing on the impact of its supply chain on the environment. Recently, sportswear manufacturer Puma has also been working on ways to reduce its carbon footprint by greening its supply chain.

Shareholders in Allegheny Energy and FirstEnergy have approved a merger between the two companies.

The energy providers - based in Greensburg, Pennsylvania, and Akron, Ohio, respectively - have received the go-ahead from their shareholders to complete a proposed $8.5 billion deal that would merge the two companies to create the nation's largest electric utility.

Owners of 80 percent of Allegheny's outstanding shares voted in favor of the deal. The news comes just a few days after 75 percent of FirstEnergy shareholders in Akron gave their approval. However, the deal isn't inked quite yet; the two companies must still win approval by the Federal Energy Regulatory Commission and utility commissions in Pennsylvania, Maryland and West Virginia - approval that is expected to come in the first half of 2011.

Solar panels are meant to help companies operate in a more environmentally friendly way - but what if the process for making the solar panels themselves is harmful to the Earth? According to a recent article in Solar Novus, that may be the case. One company, however, is working to make sure every process in the solar panel supply chain is green.

"To truly clean and green the solar industry, every material and every manufacturing process must be sustainable," states the article. It goes on to point out that "the manufacturing of traditional silicon-based solar panels may present health and environmental hazards."

Luckily, Santa Barbara, California-based BioSolar has developed a new technology that will help produce bio-based materials from renewable plant sources, which will reduce the cost and harmful effects of photovoltaic, or PV, solar modules.

"Regardless of how green the components are, it is imperative for PV module manufacturers to be guaranteed long term reliability for each component," said BioSolar CEO Dr. David Lee. "To ensure long term reliability, which translates to demand for stricter product specifications and longer adoption cycles, BioSolar engages PV manufacturers to ensure customized quality through the joint development of individual internal testing requirements suited to each manufacturer - a process we will continue over the coming months."

The market for technology like BioSolar's may be on the rise, as many companies - such as Puma and Ernst & Young - work to make sure their supply chains don't leave harmful carbon footprints.

BioSolar develops new solar panels to help company supply chains go green

MedAssets, a healthcare technology provider, has announced that it will purchase the Texas-based medical supply chain management company Broadlane Group in a bid to reduce hospital costs.

The merger, which cost MedAssets an estimated $850 million, should have an effect on hospital costs by providing access to supply chain solutions, outsourcing and workforce management services. MedAssets will pay $725 million upfront for the deal, and an additional $125 million at the start of 2012. The company expects to save $20 million in 2011 alone.

Together, the two companies would have reported a net revenue of $508.9 million.

"The Broadlane Group and MedAssets are an outstanding strategic fit, and this combination offers numerous benefits for our clients and stakeholders. We are bringing together some of the best contract pricing in the industry, with highly complementary technology and clinical consulting expertise from both companies," said John Bardis, chairman, president and CEO of MedAssets.

The Broadlane Group's chairman and CEO, Patrick Ryan, is expected to join the MedAssets board of directors.

"What can Brown do for you?" is the question that United Parcel Service has been asking its customers for years - but now, the company is focusing on another aspect of its business by releasing a new advertising campaign that proclaims, "We [heart] Logistics."

The 103-year-old company's first global marketing campaign is designed to help customers understand the power of logistics, which the company defines as the critical steps that allow a business to get its product to buyers, including stocking and running a warehouse, filling orders, clearing goods through customs, choosing a shipping method and handling returns. The campaign reflects the company's shift from simply a package delivery service to a full logistics provider.

Scott Davis, chairman and chief executive of Atlanta-based UPS, told the Wall Street Journal that the campaign was inspired by the knowledge that most of UPS's customer base only exports to one country - usually Canada.

"They are somehow intimidated by the cultural challenges of shipping to other countries," said Davis, who also sits on President Barack Obama's President's Export Council, a group of labor and business leaders that is working to double U.S. exports in five years.

Davis admitted that the U.S. is beginning to see some economic recovery, but stated that "if you're looking to grow over the next 10 or 20 years, you've got to look at a customer base beyond the U.S."

Puma, the popular sports apparel brand, has launched an investigation into the carbon footprint of its supply chain and logistics operation.

Puma North America, which provides everything from footwear to accessories, has contracted with supply chain and freight forwarding service Damco to map the carbon emissions released by its Sportslifestyle brand's supply chain operation in the U.S.

The study is designed to help the company improve its environmental footprint and achieve carbon-neutrality for 2010 and beyond, said Helmut Leibbrandt, senior vice president of warehousing and operations for Puma North America. The company intends to meet its goal to reduce carbon, energy, and water consumption and waste by 25 percent by the year 2015, reports Logistics Today.

To achieve this, the company is taking a number of radical energy-saving steps. Puma will incorporate the use of solar panels to store energy to power its Los Angeles, California-based warehouse facility in a bid to take the plant 100 percent off the grid. Additionally, the warehouse is now using electric and propane-based machinery, which emits significantly less greenhouse gases than its diesel counterparts.

Damco also recently secured another prestigious contract, this time with Lockheed Martin. Damco will model a supply network for Lockheed's F-35 fighter jet to ensure the company has full access to important information on cost, lead-time, capacity and reliability for transportation routing and warehousing, reports Logistics Week.

UK supermarket chain Morrisons has released its interim results for the first half of its financial year, and the report details the retailer's efforts to increase supply chain efficiency.

Like many other businesses, Morrisons recognizes the importance of an efficient, simple and effective supply chain in order to provide its customers with the lowest prices and remain competitive against the UK's other major grocers, reports Supply Chain Analysis.

"Over the past six months I have spent time getting to know this great business and its people," said Morrisons' new CEO, Dalton Phillips. "Three observations stand out: Morrisons is a world class retailer; it has real and positive differences in its fresh offer, food production and craft skills; and there are many opportunities ahead to drive our topline, increase efficiencies in the business and to capture growth. Today we are outlining plans to build on our strengths and generate profitable growth."

Since Dalton assumed the position of CEO, Morrisons' turnerover has increased 9.1 percent, underlying profits before taxes have risen 14 percent and the company has begun to move into the online space by launching an ecommerce platform to allow users to shop for groceries from their computers.

Commodity prices have soared to a one-month high, thanks to speculation that demand from China and the U.S. will support the markets for metal and energy.

The S&P GSCI Total Return Index, which includes 24 different commodities, increased 0.9 percent to 4,247.8, the highest level since August 11. Among the commodities experiencing a rise in a value are zinc, which jumped 2.9 percent, aluminum, which increased 2.2 percent, and crude oil, which gained 0.9 percent, according to BusinessWeek.

"News that Chinese production is growing more than expected is very supportive," Thorbjoern Bak Jensen, a Global Risk Management analyst based in Middelfart, Denmark, told BusinessWeek. "U.S. data this week may further write off the prospect of a double-dip."

In fact, industrial production in China - which is the largest consumer of industrial metals - rose 13 percent in August over the same time last year. Another metal buoyed by the Chinese market is copper, according to a report from FOX Business.

Gasoline prices are experiencing a spike due to a pipeline leak in Illinois.

Enbridge Energy Partners shut down one of its major pipelines earlier this week to repair a leak - a pipeline that was the main supply of western Canadian crude oil to several U.S. refineries. According to company officials, the line is capable of moving more than 670,000 barrels of crude oil per day.

Gasoline prices across the country increased by an average of one cent per gallon, although in many Florida counties that figure was as high as three cents per gallon. In metropolitan Detroit, the increase has been as much as 16 cents per gallon over the past week, according to the Detroit Free Press.

"As with any increase in the price of crude oil, retail gas prices will follow suit and move slightly higher this week," Jessica Brady, manager of public relations for AAA, told the Ocala Star-Banner. "Whether or not prices continue to increase depends on how soon workers can fix the leak in the Illinois pipeline."

This isn't the first instance of bad press for Enbridge. Earlier this year, another of the company's pipelines spilled 800,000 gallons of crude oil into the Kalamazoo River.

There is always a clamor about looming "killers" but rarely do they execute. For example, we're all waiting for the Windows killer, the iPhone killer, and the Google killer but we haven't seen anything quite making the grade just yet. While Google may not be sleeping with the lights on and nervously bracing for its killer to pounce, there has been a lot more buzz (no pun intended) lately about Google needing to diversify to protect themselves in a dying market: search.

Fortune recently ran a feature about this very topic among a number of other news sources but none clearly indicated that they were aware of Google's latest twist on what the articles called a dying application. I have always been fascinated by search engines and their ability to give me just what I'm looking for in a fraction of a second. Not only is all of the information on the web indexed but it can be queried to a remote server, searched, and returned in under a second. It's impossible, even with magic. To top it off, Google has lead the way for over a decade with its simplistic approach and has never let the adoption of new products, services, and innovations get in the way of their aesthetically simple easy to use interfaces. So when the naysayers talk about search dying, and Google being at risk, what's Google's answer? More straightforward, simple, innovation to lead the way.

While Google has attempted to diversify (see AdMob, Doubleclick, YouTube, Picasa, Google phones, etc.) the majority of their profits are derived from their search prowess and the associated ad revenue. It doesn't appear the Google is ready to jump ship on search quite yet. With the additional functionality of the new Instant application, they can serve up 7 times the results and therefore, potentially, can increase ad exposure and turnover substantially. Furthermore, they have proven themselves once again as innovators and certainly the best at what they do, leaving competitors only to play catch up while maintaining their hold on the market. Bringing similar functionality to phone applications will also help them to further secure their stance as the leader in search.

There is definitely not a Google killer in site. Is Google dying? I don't think so. Is their growth in the search arena slowing? Yes, probably, but whose isn't? Google can breathe easy for now, but I think they will need to continue diversifying and testing their mettle in other markets. I am certainly interested to see what areas they branch into in the next few years.

It has been an interesting couple of weeks in the blogosphere, all surrounding a couple of guest posts over on Sourcing Innovation, starting with "Strategic Sourcing is Dead!!!"

To wrap up the week here on our blog, I figured I would compile a list of all of the interesting posts and opinions that I have found on the topic these past two weeks. Please let me know if I missed anything or if you have any comments.

Two organizations have banded together to create a global supply chain security group intended to protect corporations and increase efficiency.

The founding organizations - Powers International and System Planning Corporation - said that the newly-minted Cargo Intelligence and Security Association will create an alliance of companies and organizations dedicated to international supply chain and container security. Organizations that become members will enjoy a number of benefits, including economies of scale and better positioning to address vulnerabilities, risks and inefficiencies within the global supply chain.

The group could also prove to be a "pivotal link" between the government and the private sector.

According to the founders, the association is meant to help companies "share ideas and discover synergies to compliment the rapidly expanding intelligent supply chain market. Its outreach will include educational forums on container security and supply chain security for the purpose of information sharing between the private sector and government agencies."

Air Products and Chemicals has finally made Airgas an offer it can't refuse.

Earlier this week, Air Products boosted its offer to buy the rival company to $65.50 per share - about $5.5 billion - but said the offer won't stand if Airgas shareholders don't elect its board slate and approve its bylaw proposals.

Now, the Federal Trade Commission has accepted a consent decree in connection with the proposed acquisition.

"The consent decree permits Air Products to acquire Airgas subject to the divestiture of certain assets and permits, for a period of time, the closing of the acquisition prior to completion of the divestiture," the company explains in a press release. "The assets to be divested relate primarily to Airgas' liquid bulk and on-site supply of atmospheric gases, including production and related assets."

However, the acquisition won't be complete until Airgas agrees to abide by Air Products' bylaws.

"All of the principal conditions to completing a transaction with Airgas have been satisfied," said Air Products CEO, chairman and president John E. McGlade. "The only thing standing in the way of Airgas shareholders receiving a substantial premium for their shares now is the continued refusal of the Airgas Board to engage with Air Products on any level."

Ford Motors expects global automobile production to increase 5 to 10 percent over 2009 levels this year - not the largest gain, perhaps, but a beacon of hope in an economy still struggling to pull itself from the recession.

In 2009, automobile production was down 13 percent from the previous year. Automakers produced approximately 60 million vehicles, down from a peak of 72 million in 2007, reports the Associated Press.

"The business environment is challenging but we do expect global growth to continue going forward," Ford Americas president Mark Fields said earlier this week at the Credit Suisse Automotive and Transportation Conference in New York.

Ford also stated that its structural costs could rise by as much as $1 billion this year, due to increased marketing for the new Ford Focus and Ford Explorer models, as well as product development. Fields added that the company has used plant closures, employee buyouts and layouts to cut out $10 billion in structural costs since the end of 2005.

The automaker also recently announced its decision to expand its supply chain in India and China to capitalize on a still-strong Asian market for cars. In India, Ford has invested $500 million this year to double production capacity. In addition, the company is building two new vehicle plants in China - one in Chongqing, with its joint venture Changan Ford Mazda Automotive, and one in Nanchang with Jiangling Motors.

As mentioned in Joe's post, the original post by Mpower was filled with so many buzzwords, abbreviates, acronyms and clichés that it was difficult to even understand the point they were attempting to make. However, after a couple of reads, I definitely disagree with their assumption that "Strategic Sourcing is Dead". What I do think is dead, is the ability to sell supply chain improvement projects, both as internal initiatives or hired-consulting firm initiatives, by selling buzzwords, massive reports, case studies and ego-based resumes on one's history of sitting in board rooms with the Big 5 consulting firms or not-so-well-known professors; strategizing about best practices, benchmarking or research reports.

I agree with their assumptions that strategic sourcing can often be about cost, however it is completely incorrect to say that a process rooted in cost can never be strategic. "Cost as a strategy, for the majority of organizations, is not, and has never been, a core strategy". Tell that to any number of the popular netbook manufacturers who do not innovate, they simply copy designs at a lower price. Read about Acer's rise to major manufacturing status; "And when it spots a hot trend started by another company — netbooks, for instance, were the brainchild of Asustek, a fellow Taiwanese company — Acer follows in force, bombarding the market with low-cost products"..... Take a look at Asus who is in the process of developing a lower-cost version tablet pc to compete with the iPad. Tell that to the car manufacturers that standardize internal parts across product lines and form partnerships with suppliers, tool and die makers, and material engineers to develop and test lower-cost/higher-strength materials. For many businesses, their supply chain and success of sales revolves directly around low-cost components. Each of these examples listed above all fall within Strategic Sourcing’s domain.

The original piece also said "Furthermore, cost reduction is not very high on the goal sheet of any of our major internal stakeholders". This is perhaps one of the most laughable statements that I have heard about the procurement industry as a whole. The last 5 years have been a renaissance in the procurement departments, moving from small departments that 'bought stuff' to entire teams that are embedded in the strategic direction of their companies, from engineering and design to marketing and sales to shipping product out the door and negotiating better financial terms. Here at Source One, we were recently engaged to assist in one, of many, internal diverse projects that took a mid-market company from $5 million in the red to $55 million in profit, in just two short years. Our collaborative piece of the sourcing projects produced $6 million in sustainable annual savings for the client, which translates to over 10% of their profits. It would be hard pressed to find any stakeholder or shareholder within that client that did not see our piece of the initiative as "high on the goal sheet".

Now, perhaps I am being a bit strong on the attack of this opinion piece. In fact, many of the concepts that are outlined are fairly solid. Companies do need to look at the stakeholder's stakeholders. They do need to think just beyond cost and build sustainable supply chains, and they do need to be prepared for the blips and bumps of supply disruption.

Mpower's follow up piece, The Sourcing Emperor Has No Clothes, continues down the same path of criticizing strategic sourcing and interjects new buzzwords such as "next practices" instead of "best practices". The second piece reiterates that, in their opinion, "Strategic Sourcing has always been fundamentally flawed". These statements again reaffirm my thoughts that the author is simply talking about improving existing processes, but is masquerading those thoughts behind buzzwords, round table discussions and slogans. There are no “next practices” as those practices should simply become the “best practices” if they produce valuable results. The Sourcing Process is only fundamentally flawed if you follow the original A.T. Kearny 7 Step Sourcing Process without adapting your own needs, skills and processes to each specific business requirement and spend category. The processes that are outlined in books and research reports are not one-size-fits all, and are simply a model for helping a company get started on developing process that work for their businesses.

It wasn't until I read this second piece that everything came together for me. These articles are nothing more than pure marketing pitches where the author is attempting to pitch their organization as a next-generation supplier of services. So I am in fact being a bit harsh, as we preach many of these same concepts at our firm, we just go about it in a different way. In fact, any successful professional services firm, or skilled internal Strategic Sourcing team is always redefining and improving their tools, resources, people, skills and processes. The difference is, they do not have a need to rebrand or create new labels for their job functions. Their stakeholders see the results through improved supply chain, supplier collaboration, and higher profit margins which means they do not need to waste their time sitting down and writing about “next practices” and 5, 7 or 11 step sourcing processes.

Strategic Sourcing is alive and kicking. The days of patting each other on the back, buzzwords, research reports without actionable conclusions, and expensive supply chain analysis reports in which the theory is never implemented, are dying.

Cost Reduction Services:

Since 1992, Source One has been providing strategic sourcing and procurement consulting services to mid-market and larger customers. Our services help to drive hard-dollar cost savings and increase the quality and overall value of products and services in our client's supply chain.